PPL spinoff on schedule

View of the PPL Plaza located on the 900 block of Hamilton Street. (EMILY PAINE, THE MORNING CALL)

Sam Kennedy, Of The Morning Call

PPL's spinoff of its supply segment is moving forward as planned, according to company officials.

The Allentown company completed several regulatory filings this month, including an application to the Pennsylvania Public Utility Commission this week, PPL CEO William Spence told analysts during a conference call Thursday.

"We're… making very good progress," he said. "We remain on track to complete the transaction… in the first or second quarter of 2015."

In June, PPL announced it would create a new publicly traded power producer through a merger with Riverstone Holdings.

The new company, called Talen Energy Corp., will be listed on the New York Stock Exchange. With a diverse mix of 15,320 megawatts of generating capacity and $1 billion in annual earnings, it will be big enough to land a spot on the Fortune 500 list of biggest American companies.

Former PPL Chief Financial Officer Paul Farr, who will be Talen's CEO, told analysts the new company has secured a $1.85 billion, 5-year loan. Additionally, Riverstone floated a $1.25 billion bond to refinance debt that the new company will assume upon its creation.

Talen could expand through the acquisition of power plants even before it has established itself as an independent company, according to Farr.

"We think we know what's coming on the market in fall and in spring," he said. "We're actively following it, and if there was something that was compelling… there wouldn't be anything that would prevent us from approaching the market right now."

Where Talen will set up shop remains an open question.

"We don't have a decision on the location for Talen Energy's headquarters yet, beyond the original commitment we made that it would be in Pennsylvania," PPL Spokesman George Lewis said in an email. "We're still considering options."

No city has more at stake than Allentown. If Talen goes elsewhere, the city's downtown would lose hundreds of high-paying, white-collar jobs attached to PPL Energy Supply, which is the segment PPL is spinning off.

About 600 of PPL's supply employees work on the top five floors of the eight-story PPL Plaza building, which opened in 2003 on the site of the former Hess's department store. The rest of PPL's Allentown employees work in the company's iconic tower and other adjacent buildings.

Already, PPL's workforce has begun to feel the impact of the merger.

"We have begun an orderly transition process that will enable us to determine the organizational structures and staffing needs of both companies," Lewis said, referring to PPL and Talen. "We don't yet have counts for how many jobs will go to Talen Energy and how many will be eliminated within PPL.

"We expect that many of those decisions will be made by the end of the year."

Most of the PPL employees affected by the spinoff work outside Allentown. PPL Supply has 3,000 workers, most in power plants.

After spinning off Energy Supply, the new, smaller PPL Corp., which will remain in Allentown, will be almost entirely focused on electricity distribution through regulated utilities in Pennsylvania, Kentucky and the United Kingdom.